The value of trademark
A carefully selected and nurtured trademark is a valuable business asset for most companies. For some, it may be the most valuable asset they own. ‘Trademarks” and “Brand” are often used interchangeably. The American Marketing Association defines a brand as a “name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name.”
According to Brand Finance the world’s number one brand in terms of value is Google, which is said to be worth $44.3 billion. In second place is Microsoft ($42.8 billion), with Wal-Mart in third ($36.2 billion). Other brands in top ten position are IBM, Vodafone, Bank of America, GE, Apple, Well’s Fargo and AT&T.
Trademarks are valuable assets to companies because consumers value trademarks, their reputation, their image and a set of desired qualities they associate with the mark and are willing to pay more for a product bearing a trademark that they recognize and which meets their expectations. Therefore, the very ownership of a trademark with a good image and reputation provides a company with a competitive edge over its competitors.
Considerable amount of resources are required to build brands / trademarks and businesses are encouraged to register their trademarks at the very beginning of the business. Without the protection of a registered trademark, other enterprises may free-ride on the company’s reputation and goodwill.
What are the functions of a trademark?
Ensures that consumers can distinguish between products
Enable companies to differentiate their products
Are a marketing tool and the basis for building a brand image and reputation
May be licensed and provide a direct source of revenue through royalties
Are a crucial component of franchising agreements
May be a valuable business asset
Encourage companies to invest in maintaining or improving product quality
May be useful for obtaining financing
In a larger sense, trademarks promote initiative and enterprise worldwide by rewarding the owners of trademarks with recognition and financial profit.
Trademarks protection hinders the efforts of unfair competitors, such as counterfeiters, to use similar signs to market inferior products.
The system enables people with skill and enterprise to produce and market goods in the fairest possible conditions, thereby facilitating international trade.
Thus trademarks reward the manufacturer who constantly produces high-quality goods, and as result stimulates economic progress.